Revenue Determinations

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Under Self Assessment, taxpayers are required to file their tax return by a certain filing date. If they fail to do so they face the risk of having the HMRC determine their tax liability by raising a so called Revenue Determination.
The Revenue Determination is meant to encourage the taxpayer to send in his/her return to the HMRC by estimating the taxpayer’s tax liability.
Once a Revenue Determination charge has been added to the taxpayer’s Self-Assessment record a notice known as ‘Determination of tax due’ will be issued to the taxpayer and his/her agent.

A Revenue Determination will automatically involve any payments on account for the following tax year. Also, where Revenue Determination and any overdue payment on account remains unpaid, interest and surcharge will be added to the taxpayer’s record.

There is no right of appeal against a Revenue Determination but the submission of the completed tax return will take the place of the Determination and the determined amount of tax will be automatically amended to the return amount. Any related interest, surcharge and payments on account will also be automatically amended.

A Revenue Determination must always be raised for an amount equal to or greater than the previous or last year’s liability, and include where necessary an appropriate percentage addition to the previous year figure.
Very important to know is that Determinations can only be raised within 5 years from the filing date.
Taxpayers can displace the determination with their own self assessment at any time up to the fifth anniversary of the filing date for the year of assessment in question (or one year after the determination was issued, if later). After five years things become a little bit more difficult as a certain concept may need to be applied, that of equitable liability.
In order to avoid having to deal with a Revenue Determinations, self-assessment taxpayers need to make sure that they are familiar with the filing deadlines and seek help from tax companies like Taxfile when sending their tax return , especially now with a new 31st October paper return deadline in place.

Use of Home as Office

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If you are self-employed, there is a type of relief called use of home as office that can be offset against your tax liability.
If you run your business partially from home you can could set a proportion of your home running costs against income tax.What sounds like a very easy task for any tax accountant has proven to be quite difficult as the HM Revenue & Customs can easily argue the figures as there are no clear rules that can be applied.
Among the expenses allowed in this category we can mention the following: Council Tax, Mortgage interest, Rent, Repairs and maintenance, Cleaning, Heat, light and power, Telephone, Broadband, Metered water charges.
The factors to be taken into account when apportioning an expense include according to HMRC:
•the area used for business purposes,
•the usage in connection with electricity,gas or water and
•the time used for business purposes compared to other use.
By following this link you can see some examples provided by HMRC related to ways of approaching the use of home as office.
This is what the courts have approved in terms of apportioning expenditure for home as office:
“… it is possible to apportion the use and cost of a room on a time basis, and to allow the expense of the room during the hours in which it is used exclusively for business purposes, in the same way as it is possible to calculate the business expenses of a car which is sometimes used for business purposes exclusively and sometimes used for pleasure.” (Templeman J in Caillebotte v Quinn [1975] )
Very important is to retain good records to evidence whatever claim you make for using your home as office in case the taxman argues your figures. For more help in understanding tax reliefs for self-employed, Taxfile in South London and Exeter is here to help.